We connected with cofounder and CEO Rob Robertson for a deep dive on his firm and the deal:
What is your background as it relates to MedNet Solutions?
I am one of the original four founders of the company, which dates as far back as 2001. This was the early stages of the eclinical and digitization of clinical trials.
Are the other three individuals still with the company?
How do you describe your technology and solution in the market?
If you’re a medical device or pharmaceutical company, you have to conduct a series of FDA clinical trials to get your drug or device to the market. Our iMedNet eClinical offering allows the trial to be conducted in an efficient, reliable and cost-effective manner.
There are typically three phases of trials that are conducted before that a drug or device can be approved to be sold for a specific medical indication and there are post-clinical studies as well.
We got our start for organizations conducting these trials as a custom software firm originally, helping them convert from a paper process to digital. This went well as we grew profitably for years from 2003 – 2009.
But the problem, as you can imagine, is that it was labor intensive to build studies in the manner, also expensive for customers and the industry we serve. In order to improve our model, we developed a product that takes advantage of the SaaS model and allows our customers to build their own studies.
iMedNet came out in early 2012 and we now have the most configurable solution on the market.
How do you sell the product?
We sell directly to medical device and pharmaceutical companies that will build five or more studies per year as well as to clinical/contract research organizations (CRO). CRO’s are outsource organizations that medical device and pharma companies use to conduct their studies. We serviced about 400 studies in 2016 and is projected to approach 700 next year.
From a revenue perspective, what does that yield?
We are up 50% on contract revenue this year over last year, also a record year. Next year we intend to have contracts over $30m.
What does your geographic distribution currently look like?
90% of our sales are domestic, although there are sites participating in our trials from over 70 different countries around the world. Now, there’s a reason we were started here given all the medical device companies in town. Our sales focus is where most of the Medical Device Companies are located primarily in the Boston, Minnesota, Indiana and the west coast and where the Pharma companies are which is basically both coasts of the United States.
What’s the split between those two markets?
We’re really about 50/50
Do you see opportunity in new markets?
There’s enough opportunity in the clinical trial healthcare market to keep us focused for the next 3-5 years.
What does the total addressable market look like?
The e-clinical industry is estimated to be over a 2 billion dollar industry currently.The electronic data capture portion tied with inventory, Randomization, clinical trial management, coding, etc — it’s just an immense industry. Experts are saying that this the industry will be a growth industry to 6 billion by 2020. We feel like we are well positioned to take advantage of the long-term growth.
Do you have other offices outside of Minnetonka?
This is currently our only office in the US although we are looking to expand into Europe and Asia in the coming years.
How many full time employees do you have?
Your partner, Arrowroot Investment, has previously invested in the company right?
Yes. When we started out, we raised a few hundred thousand from friends and family but didn’t raise another dime until 2014 when we started developing the SaaS and partnered with Arrowroot – they invested $4.5m at that point.
How did you meet Arrowroot?
It was a friend of a friend who introduced me to Matt Safaii the founder of Arrowroot.
Did you consider keeping the deal local?
We talked to a number of people and frankly, no-one locally took a deep enough interest in us.
And how about Cohesive Capital Investors?
They are secondary/follow-on investors we met through Arrowroot.
How did you settle on $16m, and not $10m or $20m?
That’s a good question, really it worked out that we were looking for a certain amount of funds at a certain price and that’s the number we backed into based on the plan. We didn’t want to go out and raised money again, it’s a time consuming and stressful process that is distracting from the day to day of running the company. We expect this to take us to where we want to be.
Where is it that you want to be?
We plan to take this company to $50m revenue in the next 3-4 years.
What is the application of the $16m?
With the latest investment, there’s a small recapitalization for early shareholders as well as the capital to further invest in R&D + sales/marketing; international expansion is imminent.
Have you made any acquisitions so far?
We have not, but this does open the potential for that.
Is there anything else you would like to add?
Imagine a patient on a table somewhere…this could be you, a family member, or a friend. There are devices and drugs being used to save or improve that patient’s life. We help those life saving or life altering products get to market in an efficient, reliable and cost-effective manner. We are a small part of the process, but that brings big meaning for me and our employees, we take that responsibility very seriously.